Pay Equity Keeps Getting More Complicated November 17

About Fortney. Scott represents clients on workplace matters, including representation before federal enforcement agencies including the U. S. Department of Labor (“DOL”), the Equal Employment Opportunity Commission (“EEOC”) and state enforcement agencies. Our attorneys have significant experience advising and counseling clients on domestic and international workplacerelated matters, including compliance programs, pay equity, equal employment and nondiscrimination obligations, wage and hour and prevailing wages, investigations of workplace claims and complaints, government contracting, and the development of strategies for avoiding or responding to workplace-related crises. 1 © 2017

About Our Pay Equity Group • We work closely with employers across the country to address the full spectrum of pay equity issues • Our Pay Equity Group is comprised of expert attorneys who partner with statisticians and labor economists • Our comprehensive pay equity expertise includes: • Defending employers in agency enforcement proceedings and in litigation brought under Title VII, the Federal Equal Pay Act and state equal pay laws; • Conducting privileged, proactive pay analyses; • Helping clients identify and address unexplained pay disparities; and • Providing advice regarding the design and administration of pay systems to achieve pay equity and minimize liability 2 © 2017

About our Affirmative Action Group Our Affirmative Action Compliance and OFCCP Defense practice group of lawyers, statisticians, and data analysts have prepared thousands of affirmative action plans (“AAPs”) for our federal contactor and subcontractor clients. We have defended hundreds of OFCCP audits, including successful defense of Corporate Management (“Glass Ceiling”) Compliance Evaluations. As a law firm, we offer more than consulting services, we offer strategic thinking and sophisticated legal representation. 3 © 2017

About Mickey is Chair of the firm’s Affirmative Action & Pay Equity Group. He is recognized as a national expert on pay equity. Mickey oversees pay equity projects conducted on a proactive basis and in response to EEOC investigations, OFCCP audits, internal complaints, and litigation. He works closely with the firm’s in-house statisticians to conduct these analyses. Mickey conducts mock audits assessing compliance with pay equity, EEO, and affirmative action. Mickey and the Practice Group have prepared thousands of affirmative action plans and defend hundreds of OFCCP and EEOC investigations. 4 © 2017

Lawyer’s Disclaimer The materials contained in this presentation were prepared by the law firm of Fortney & Scott, LLC for the participants’ reference in connection with education seminars. Attendees should consult with counsel before taking any actions and should not consider these materials or discussions to be legal or other advice. 5 © 2017

Agenda • • “Equal pay” – we say it, but what does it mean? Its all about the “Pay Gap” New, Aggressive tools to Attack the Gap Pay Equity Energy shifting to the States and Cities Are requests for pay history. . . history? “Safe Harbors” both Deep and Shallow Activists Shareholders Demanding Pay Parity and Transparency 6 © 2017

First, Let’s Define Our. Terms • “Equal pay for equal work” – employees doing the same job should be given equal pay • Pay Equity – paying employees fairly, taking into account job related factors such as education, work experience, tenure, etc. • Pay Parity – Activist Shareholders increasingly demand companies show there is no pay gap across the entire workforce • Pay Transparency – This goes with the last one 7 © 2017 5

Next, Who Goes with Whom. . . Depends Who You Ask • Similarly situated – federal law standard essentially says to compare employees doing the same job • Substantially similar – California’s expanded standard – similar work when viewed as a composite of skill, effort, and responsibility • Comparable work – Massachusetts standard goes further – who remembers “Comparable Worth”? • Work of comparable character – Oregon’s version • Pay Analysis Groups – OFCCP creates its own standard in Directive 307 – most expansive of all? 8 © 2017

Next, Let’s Talk about Harbors • Safe harbors. . . that is • Where there are safe harbors, whether deep or shallow, you get there with proactive pay analyses • “Deep” safe harbors • Are a complete “affirmative defense” against pay discrimination claims • Massachusetts is the only true “deep” harbor • “Shallow” safe harbors • Are a limited defense, typically to additional damages beyond “make whole” • Oregon, Puerto Rico already there – others coming 9 © 2017

Setting the Stage – The “Pay Gap” For every $1. 00 paid to men, how much is paid to. . . Group Nationwide All Women 80¢ African-American Women 63¢ Hispanic Women 54¢ Over the course of a 40 -year career, a Hispanic woman can expect on average to earn at least $1 Million less than a man 10 © 2017

Pay Equity and the Trump Admin Energy Shifting to the States and Big Cities • Trump has said he supports equal pay for women. Ivanka Trump is a big equal pay advocate • Despite this, growing momentum at state and city level to enact aggressive pay equity laws • While there may be less federal enforcement during the Trump administration, “careful what you wish for”. . . • Many states and big cities are quickly passing a “patchwork” of pay equity laws that differ and often contradict each other • Growing international obligations • UK – company website “gender pay gap” reporting by April 2018 11 © 2017 6

Blue States “Blue States” and Big Cities expect less federal enforcement so they are taking up the pay equity torch “At these stormy times of instability and confusion, let New York serve as a safe harbor for the progressive principles and social justice that made America” - New York Governor Andrew Cuomo 12 © 2017

New, Aggressive Tools “Attack the Gap” • Many states, big cites, academics, comp theorists, women’s and civil rights groups coordinating to “attack the gap” • Bans on Requests for Applicants’ Salary History • Aggressive State Equal Pay Laws • Safe Harbors to Encourage Proactive Pay Analyses • “Naming and Shaming” aka Pay Gap Website Reporting • Pay Data Reporting • OFCCP Pay Deep Dives • Activist Shareholders Demands for Pay Parity and Transparency 13 © 2017

Is Asking for Salary History…History? 7 © 2017

Bans on Requesting Salary History – The Newest Tool to “Attack the Gap” • While we can differ as to why it exists - The Pay Gap is Real • This persistent pay gap has existed for several decades with little change despite laws since the 1960 s prohibiting pay discrimination • States big cities, and other pay equity champions are looking for new, aggressive tools to “attack the gap” • One tool that has quickly and broadly emerged is bans on requesting applicants’ salary history • Why? 15 © 2017

The Pay Gap – Paying It Forward? • Employers traditionally ask for and have taken salary history into account when making offers and setting starting salaries • This may be a “neutral” practice but women making less before will often wind up making less in their new jobs • The growing belief is that this practice perpetuates the “pay gap” from employer to employer 16 © 2017

Prohibition on Asking for Salary History • Massachusetts – first jurisdiction to ban asking for salary history – becomes effective July 1, 2018 • California – most recent to ban asking for pay history and requires employers to provide wage scale for job to applicants, upon request 17 1 7 © 2017

Other Jurisdictions That Have Passed or Proposed Similar Bans on Asking for Salary History Passed Salary History Ban Proposed Salary History Ban • California • DC • Pennsylvania • Delaware • Georgia • Rhode Island • Massachusetts • Iowa • Texas • Oregon • Maine • Vermont • Maryland • Washington • New York • Wisconsin • North Carolina • Los Angeles – feasibility study • Puerto Rico • New York City • Philadelphia • San Francisco 18 © 2017

Bans on Asking for Salary History – All The Same? Nope • Does the ban apply only to applicants living in those cities or states? • Does it apply to all applicants who apply for jobs in the cities and states? • Is the ban just for external applicants, or does it apply to internal applicants? • Can you just not ask or can you also not rely on salary history if voluntarily offered? • Can you confirm salary history if an applicant voluntarily discloses it? • At what point in the process can you ask for salary history? Post-offer, only post-offer that included pay? 19 © 2017

So, What’s a National Employer to Do? • Prediction – many additional states and several big cities will enact salary history bans in the next 18 months • Employers that operate in those jurisdictions must decide whether to create different processes and systems • Or decide on corporate consistency by developing a uniform approach across company 20 © 2017

To Ask or Not to Ask? And If Not, Then What? • Emerging Best Practices – stop asking for salary history and instead • Ask for salary expectations • Provide to applicants a salary range for the position • Set a fixed starting salary or set of salaries by position § “Matrix approach” that takes into account job-related attributes • Data-driven “predicted starting salary” approach – use stat tool to determine job offer amount based on salaries of incumbent employees in the position 21 © 2017

Growing Wave of Aggressive State Pay Laws © 2017

California Leads the Way… • California Fair Pay Act – • Compares “substantially similar” employees when viewed as a “composite of skills, experience and responsibilities” § Broader than federal standard of “similarly situated” • Compares employees across locations • Employers must explain the “entire wage differential” • Attorneys’ fees for prevailing plaintiffs – CA robust wagehour class action plaintiffs’ bar stands to benefit 23 © 2017

Massachusetts “Out California’s” California • Equal pay for “comparable work” • Arguably more expansive than any federal or other state law • Bans asking applicants for salary history • Proactive Pay Analysis Audit as a “Safe Harbor” • If the company completed proactive analysis in good faith within past 3 years – must be reasonable analysis • And, made reasonable progress towards eliminating pay disparities • If yes, this is a complete affirmative defense 24 © 2017

Puerto Rico Follows Massachusetts’ Lead, with a Few Changes • Cannot ask applicants – or current/former employers – for salary history • Prevailing Plaintiffs Get – actual dollar difference in pay plus “double damages” penalty • Pay Analysis Shallow “Safe Harbor” • Protects employers who conducted proactive analysis within past 12 months • And, made reasonable efforts to eliminate pay disparities • Only protects against “double damages” penalty, not pay difference 25 © 2017

Oregon Is the Latest to Weigh In • Equal pay for “work of comparable character” • Covers 10 protected categories including sexual orientation, religion, marital status, age, disability and marital status • Bans asking applicants for salary history – effective October 2017 • Proactive Pay Analysis as a shallow “Safe Harbor” • If the company completed proactive analysis in good faith within past 3 years – must be reasonable analysis • And, made reasonable progress towards eliminating pay disparities • If yes, this would avoid only compensatory or punitive damages 26 © 2017

. . . And Other States Follow • Alaska • Missouri • Arizona • Montana • Arkansas • Nebraska • Connecticut • New Jersey • Delaware • New York • District of Columbia • Ohio • Georgia • Oklahoma • Illinois • Pennsylvania • Indiana • Rhode Island • Iowa • South Carolina • Kentucky • Tennessee • Louisiana • Texas • Maryland • Utah • Michigan • Washington • Mississippi • West Virginia 27 © 2017

Along with Growing International Obligations Passed • UK – gender pay gap website reporting • Germany – pay equity reporting obligation and employees may request salary info • Quebec – conduct pay equity audit and post results • Sweden – survey of gender pay differences every 3 years • Singapore – calculate gender pay gap at board level Proposed • Iceland – would require companies to prove they pay men and women equally • New Zealand – would require gender pay data for publication in aggregate 28 © 2017

UK’s Gender Pay Gap Reporting • Effective April 2017 • Requires private employers with 250 or more UK-based employees to publish on company website gender pay gap • Employers must • Publish the information on their own website • Send information to the government for it to be published on a public website • Reporting deadline – April of each year, starting in 2018 30 © 2017

Shareholder Pressure to Achieve and Announce “Pay Parity” • Activist investor pressure to achieve both pay parity and transparency • CEOs are telling HR and in-house counsel: “This is going to get done” • Silicon Valley and other Fortune 500 companies feel increasing pressure to conduct pay equity analyses • . . . and publish the results • Pay parity analyses often use a different methodology than pay equity analyses • If plan to do, make these two analyses separate projects under separate privilege protocols 32 © 2017

EEO-1 Pay Data Reporting OFCCP Aggressive Pay Investigations Patchwork of State Equal Pay Laws Privileged Proactive Pay Audit “Shallow” and “Deep” Safe Harbors Shareholder Pay Parity Demands International Equal Pay vs. Pay Equity Salary History 33 © 2017